Goldman: PlayStation 4 could send Sony into a ‘downward spiral’

Count Goldman Sachs analyst Takashi Watanabe as being pessimistic on the PlayStation 4’s chances for success. Per Business Insider, Watanabe has penned a new research note that casts doubt not only on Sony’s (SNE) new console specifically, but on the gaming console business as a whole. Specifically, Watanabe thinks that smartphones and tablets are poised to erode consoles’ installed base because more people can get their gaming fix through cheap games such as Angry Birds and Cut the Rope rather than spending $60 to buy the latest version of Call of Duty. This lower installation base leads to negative reinforcement where developers are less likely to invest in developing top-notch games for the platform, which further erodes consumers’ willingness to shell out cash for the console.

“We see little reason for developers to produce top titles for platforms with a low installed base,” he writes. “In turn there is a danger the installed base will not grow because the content lineup is weak.”